Sequence of Returns Risk and Retirement Portfolio Resilience
Why retirement portfolio construction should respond not only to the mathematics of returns, but to the journey investors actually experience.
Retirement Portfolio Resilience Perspective
Primary Pillar: Sequencing-Risk Awareness
Supporting Pillars: Behavioural Survivability • Retirement Portfolio Construction
This article examines one of the defining challenges of retirement investing: sequence of returns risk. While decades of retirement research have demonstrated the mathematical impact of poor early retirement returns, this paper explains why retirement portfolio construction should respond not only to the mathematics of returns but also to the retirement journey investors actually experience.
Using historical market evidence and established retirement research, the article demonstrates how recovery periods have varied significantly through history and why retirement portfolios may become increasingly dependent on favourable market conditions if this risk is not intentionally addressed.
For investors, advisers and researchers seeking to understand why retirement investing differs from accumulation investing, this article provides the educational foundation for Sequencing-Risk Awareness within the Retirement Portfolio Resilience Framework.
